Chapter 16

Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

Assume that you conduct a relative value trade and close it out after 5 days. Your 5-day return is 0.84%. Annualize this return as a Bond Equivalent Yield (BEY). Assume that a year has 365 days. State your answer as a percent, but without the percent sign. So, for example, if your answer was 0.1053, which is 10.53%, you would answer 10.53.

3. Assume you purchased a bond for $9,186. The bond pays $300 interest every six months. You sell the bond after 18 months for $10,000. Calculate the following: a. Income. b. Capital gain (or loss). c. Total return in dollars and as a percentage of the original investment. Review Only Click the icon to see the Worked Solution. a. The current income is $ (Round to the nearest dollar.) b. The capital gain (or loss) is $ (Enter a loss as a negative number and round to the nearest dollar.) c. The total return in dollars is $ (Round to the nearest dollar.) The total return as a percentage of the original investment is %. (Enter as a percentage and round to two decimal places.)

Suppose that you buy a two-year 7.3% bond at its face value. a-1. What will be your total nominal return over the two years if inflation is 2.3% in the first year and 4.3% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal return a-2. What will be your real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real return % % Real return Nominal return b. Now suppose that the bond is a TIPS. What will be your total 2-year real and nominal returns? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 1%

Use a different graph for each one and clearly label the axis and the shifting of curves.  Explain clearly (in words and on the graph) whether the price and yield to maturity increased or decreased.   You buy a bond that pays annual interest payments of 8% of the bond’s face value of $1000. You initially pay $1050 for the bond.  You receive an annual interest payment after one year, then sell the bond for $1010.  What is your total rate of return on the investment, expressed as a percentage of the purchase price?

Answer the given question with a proper explanation and step-by-step solution. Please provide the answer using the math tool otherwise I give the downvote.

Suppose that you buy a two-year 8.9% bond at its face value.   a-1. What will be your total nominal return over the two years if inflation is 3.9% in the first year and 5.9% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)           a-2. What will be your total real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)           b. Now suppose that the bond is a TIPS. What will be your total 2-year real and nominal returns? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Please solve using Excel and show/explain the formulas.

An insurance company must make payments to a customer of $10 million in one year and $5 million in five years. The yield curve is flat at 10%. Required: a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What must be the face value and market value of that zero-coupon bond? Note: Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places. a. Maturity of zero coupon bond b. Face value b. Market value years million million

You must use formulas and cell references PV of Payments when computing all values in the green cells Problem 1: Calculate the duration of a $1,000, 6% coupon bond with three years to maturity. Assume that all market interest rates are 7% Problem 1b: Consider the bond in Problem 1a. Calculatethe expected price change if interest ratesdrop to 6.75% using the duration approximation.Also calculate the actual price change using discounted cash flow.

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In this problem we are going to calculate bond prices and returns Suppose that the yield on a 3 year note is 2.5%. a) Calculate the price of the 3 year note (face value = $1000) with three annual coupon payments (after year 1, after year 2, after year 3) of $30, i.e., the coupon rate is 3.0%. b) Is this note selling at a discount or premium? Explain. Suppose that after one year and after you receive one coupon payment, you decide to sell your note. Your note is now a two year note with one coupon payment after 1 year and another after year 2. Consider the following two scenarios: Scenario #1 - interest rates on what is now a two year note (i.e., your note) have fallen to 1.00% Scenario #2 - interest rates on what is now a two year note (i.e., your note) have risen to 4% c) given scenan d) Calculate the price that you can sell your note for under scenario #1 and the associated rate of return when you sell your note Calculate the price that you can sell your note for under scenario #2…

Consider a 6%, 15-year, semi-annual payment bond with a par value of $1000. Compute the current yield if the yield to maturity is 7% (round answer to two decimal points.) Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

Topic 2: Return measures2. Which of the following investments do you prefer?(a) Purchase a zero-coupon bond, which pays $1000 in ten years, for a price of $550.(b) Invest $550 for ten years in a bank savings account at a guaranteed annual interestrate of 5.5%.1

Consider a loan with three years to maturity that pays the bank a 9% coupon rate. You estimate that the yield-to-maturity on loans of similar risk is 6%. Finally, assume that the principal of the loan is $3 Million.   (a) Calculate the current market value of the loan assuming the above yield-to-maturity assumption is correct. (b) Calculate the duration of the loan. (c) If the interest rate drops by 0.75%, then use duration to approximate the percentage change of the loan’s price. (d) Calculate the dollar duration of the loan.   Question 2.  (a) Based on the table below, calculate the duration gap for the bank. (b) Estimate the change in equity in absolute and percentage terms if interest rates move from their current level of 4% up to 5.25%.   Instrument Value Duration       Cash 70 0 ARM Mortgages 300 0.15 Fixed Rate Mortgages 200 20 Investments in Securities 100 10       Total Assets 570…

Suppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000. Maturity (Years) 1 2 3 4 5 Show Transcribed Text B) How could you construct a 1-year forward loan beginning in year 3? (Face Value) C) How could you construct a 1-year forward loan beginning in year 4? (Face Value) Required A Required B Complete this question by entering your answers in the tabs below. Face value Rate of synthetic loan → Show Transcribed Text Price $ 970.93 898.39 836.92 How could you construct a 1-year forward loan beginning in year 3? Note: Round your Rate of synthetic loan answer to 2 decimal places. Required A 776.20 685.42 Required B Face value Rate of synthetic loan Required C 7.85 % Required C How could you construct a 1-year forward loan beginning in year 4? Note: Round your Rate of synthetic loan answer to 2 decimal places. Ċ 13.29 %

please not solve in excel

hi can explain to me how to solve the question step by step ? TQ 1. Assuming that the expectations theory is the correct theory of the term structure, calculate the interest rates in the term structure for maturities of one to five years, and plot the resulting yield curves for the following series of one-year interest rates over the next five years. how would yields curves change if people preferred short term bonds over long-term bonds?  a. 5%, 7%, 7%, 7%, 7%  b. 5%, 4%, 4%, 4%, 4%  2. If the yield curve suddenly becomes steeper, how would you revise your predictions of interest rates in the future?

Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate com What is the Macaulay duration of a bond with a coupon of 5.4 percent, nine years to maturity, and a current price of $1,055.40? What is the modified duration? Note: Do not round intermediate calculations. Round your answers to 3 decimal places. Answer is complete but not entirely correct. Macaulay Modified Duration 7.410 x Years 7.082 Years

Suppose that you buy a TIPS (inflation-indexed) bond with a 1-year maturity and a coupon of 2% paid annually. Assume you buy the bond at its face value of $1,000, and the inflation rate is 10%. a. What will be your cash flow at the end of the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be your real return? c. What will be your nominal return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Suppose that you buy a 1-year maturity bond with a coupon of 7% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 4%? 6%? 8%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)

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Need both parts with formulas not the excel. .....don't attempt if you will jot solve both parts   Suppose you purchase a ten-year bond with 6% annual coupons. You hold the bond for four years, and sell it immediately after receiving the fourth coupon. The bond's yield to maturity was 5% when you purchased and sold the bond. i. What are the cash flows from your investment in the bond per £100 face value?  ії. What is the internal rate of return of your investment?  Use formula's and not excel spreadsheet please.